Why is Digital Zoom bad?

In my experience digital zooms work in either of two ways.

#1 crop to a fraction of the pixels of the sensor (x2 = 1/1.4 width by 1/1.4 height = 1/2 of the sensor pixels, x4 =1/2 width by 1/2 height = 1/4 of the sensor pixels) and scale the pixels up to the equivalent image size of the full sensor. The processors in such cameras are "clever enough" to make the zoom factor virtually stepless. At any digital zoom factor, by calculating intermediate values the image becomes soft rather than a chequerboard. Unlike on the spy movies you cannot put detail back where there was no pixel element to detect that detail.

#2 The older cameras did not have the ability to interpolate the pixels so the file size became scaled down, the problem there is you have only certain fixed sizes so the 'zoom' was in discrete steps. Each pixel was recorded in the file without interpolation. The interpolation would happen when you went to print or display the reduced resolution image at the same size as a full sized capture. This again ends up with a soft image lacking critical detail because (except in fiction) you can't cheat the physics of too few pixels.

I'd say for the most part it'd be fair to say digital zoom is almost completely useless and notyhing but a ploy to lure un-informed photog's into buying something with 234634563456x ditigal zoom.

Like someone else had said, I'm sure some people still appreciate it. For people that care more about ease of use than image quality. (ie: jsut want to take the pictures off the camera and show them off immediately without cropping and such...)

And although ive never used this technique, I've always assumed it could be one other tiny advantage to using digital zoom - say you want to take a photo of something you cant physically get closer to, and nothing surrounding it is important at all. So using digital zoom, you zoom in on the object and give auto-focus much less area to decide where you want it to actually focus. That assures it to focus on the important part, rather than two feet behind it like it may have guessed without the digital zoom.